Caroline Musgrave discusses the application of QOCS to Motor Insurance Bureau claims


Caroline Musgrave recaps on Qualified One Way Cost Shifting (“QOCS”) before considering the recent High Court decision of Howe v Motor Insurance Bureau [2016] EWHC 884 (QB), considering the application of QOCS to Motor Insurance Bureau claims.

Here we consider Motor Insurance Bureau (“MIB”) liability for accidents caused by uninsured and untraceable drivers in the UK and abroad and the need for After the Event (“ATE”) insurance.

QOCS was introduced as part of the Jackson reforms. It is intended to protect those who have suffered personal injuries from the risk of facing adverse costs orders.

The full QOCS rules, scope and interpretation are found in CPR 44.13 to 44.17 and Subsection 12 of the Practice Direction.

CPR r44.13(1)(a) provides that “This section applies to proceedings which include a claim for damages for personal injuries”.

The core principle of QOCS is that the claimant in a personal injury action will not have a costs order enforced against him or her unless certain circumstances apply. When the claimant is successful, the defendant will generally be ordered to pay the costs. If the claimant is ordered to pay any costs, they should not be more than the damages won. When the claimant is unsuccessful, subject to exceptions, the claimant will not be ordered to pay the defendant’s costs.

The protection of QOCS can be lost and full costs enforced against a claimant in four circumstances:

1.      The claim is struck out as disclosing no reasonable grounds for bringing the proceedings.

  1. The proceedings are an abuse of the court’s process.
  2. The conduct of the claimant or person acting on behalf of the claimant is likely to obstruct the just disposal of the proceedings.
  3. The claimant has failed to beat a defendant’s Part 36 offer to settle (albeit the liability is capped at the level of damages and interest recovered).

The QCOS regime does not apply where the claim is found on the balance of probabilities to be fundamentally dishonest.

Howe v MIB

Howe was rendered paraplegic while driving in France when a wheel came off a lorry and collided with his lorry. It was impossible to identify the lorry from which the wheel came loose or its driver or insurer.

The claim was brought against the MIB pursuant to regulation 13(1) of The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Board) Regulations (SI 2003/37 (“the 2003 Regulations”).

The claim was unsuccessful. The question at the hearing in April 2016 was whether the claimant was entitled to the protection of the QOCS regime such that he would not be liable for MIB’s costs.

Stewart J recognized that the purpose of QOCS was to protect those who had suffered injury and to ensure injured people were not deterred from bringing claims from compensation. Against this backdrop he asked himself what was the proper interpretation of 44.13(1) “A claim for damages … for personal injuries”?

The answer, he held, was that the claim against the MIB was not a claim for damages for personal injuries and accordingly the claimant was not afforded QOCS protection. Orders for costs against the claimant were to be enforced in the usual way.

So how did Stewart J reach this decision and what can be learnt from the decision?

Not “damages”

Stewart J considered the definition of “damages” concluding that damages are an award in money for a civil wrong. Where there is no wrong, there is no action for damages.

He then concluded that a claim against the MIB was not a claim for damages because there was no allegation of breach of duty on the part of MIB.

Civil debt

Stewart J’s view was underlined by the language of the 2003 Regulations which state at regulation 16 that “Any sum due and owing pursuant to these Regulations shall be recoverable as a civil debt”. The 2003 Regulations offered a cause of action for a civil debt which was independent of any breach of duty or other wrong by the MIB.


Three matters arise for comment.

Firstly, Howe v MIB was a claim under the 2003 Regulations relating to a UK driver having an accident abroad. Liability for domestic accidents caused by uninsured and untraceable drivers passes to MIB pursuant to the Uninsured Drivers Agreements (1999 and most recently 2015 agreement).

Under the Uninsured Drivers Agreements 1999 and 2015 liability is assigned to the MIB for an unsatisfied judgment against an uninsured driver. There is no equivalent provision to regulation 16 of the 2003 Regulations labelling this liability under the Uninsured Drivers Agreement as a civil debt rather than damages for personal injury.

However as detailed above, the decision in Howe was based on both regulation 16 and also the definition of damages. The finding that the MIB was not in breach of duty and therefore a claim against it was not a claim for damages is likely to give rise to similar argument about the applicability of the QOCS regime to domestic claims against the MIB.

Secondly, there have been long standing concerns that the MIB regime is not compliant with the European Directives which mandated the regime.

Howe arguably undermines the purpose of MIB. If Howe is right, then the injured can only achieve full compensation, in damages and costs, where the driver and insurer are identified but not where they remain unknown. This seems contrary to the intention of MIB and the Directives.

Stewart J heard this argument but determined that whether or not the QOCS regime was compliant with the European Directives was not a matter for him. However the equivalence and effectiveness of the domestic regime is important and does remain a live issue. It is a perspective that should be considered when litigating matters against the MIB.

Finally, ATE insurance. If Howe is right, solicitors will have to warn clients of all MIB claims involving accidents abroad that they face adverse costs risk and advise about ATE insurance. The point here is that ATE premiums are not recoverable from the MIB in successful cases so clients must bear this cost in both successful and unsuccessful claims. Whether or not this can be done depends upon the costs of the premiums and the availability of the suitable policies.

There is real potential for the MIB to contend that Stewart J’s decision applies equally to the MIB’s responsibility to compensate victims of domestic accidents as well those who have accidents abroad. If so, clients must be advised of adverse costs risk and the need for ATE insurance in domestic accidents as well as those abroad.

The take away practical implication of Howe is that until this issue is litigated further or clarified elsewhere, ATE protection must to be sought for claimants pursuing claims against uninsured or unidentified drivers whether the accident happened in the UK or elsewhere.